KUALA LUMPUR (April 8): Pan Malaysia Holdings Bhd’s (PM Holdings) minority shareholders should reject the takeover offer from new major shareholders, its independent adviser said.

The six sen price tag is at significant discount to the counter’s share price, and the stock will still be traded on the open market after the offer closes, according to DWA Advisory Sdn Bhd, which had been appointed to evaluate the offer.

“We are of the opinion that the offer is not fair and not reasonable,” said DWA Advisory. The firm advised non-interested directors to recommend shareholders to reject, and accordingly, urged shareholders reject the offer.

Property developer Exsim Group's founding Lim brothers, through Exsim Hospitality Holdings Sdn Bhd, last month bought a 65.9% stake in PM Holdings from entities linked to prominent businessman Tan Sri Khoo Kay Peng for RM36.73 million or six sen a share.

Under Malaysian takeover laws, Exsim Hospitality is obliged to extend an unconditional mandatory takeover offer to buy up all the remaining shares at six sen per share, in cash, even as it intends to maintain PM Holdings’ listing status.

The offer is not fair, given that it is at a discount of 48% to PM Holdings’ share price of 11.5 sen on March 6 when the offer was made, and a discount of over 200% compared to the share price of 19.5 sen on April 1, DWA Advisory noted.

DWA said the offer is not reasonable as well, as shareholders would still be able to participate in PM Holdings’ trading after the offer closes, given that the Lim brothers intend to maintain its listing status.

Nonetheless, DWA flagged that PM Holdings’ shares are relatively less liquid compared to consumer products sector peers, based on data in the past 12 months, and there is no assurance that the counter will continue to trade at current levels.

Shares of PM Holdings jumped higher after the transaction between the Lim brothers and Khoo’s entities, nearly doubling from 11.5 sen on March 6 to as high as 22.5 sen on March 12, before paring gains to hover between the 18-20 sen range.

The stock was trading half sen or 2.7% lower at 18 sen at 4:38pm on Monday, valuing it at RM167.2 million.